Correlation Between Air New and Clime Investment
Can any of the company-specific risk be diversified away by investing in both Air New and Clime Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Air New and Clime Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Clime Investment Management, you can compare the effects of market volatilities on Air New and Clime Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Air New with a short position of Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Clime Investment.
Diversification Opportunities for Air New and Clime Investment
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Clime is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man and Air New is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Air New Zealand are associated (or correlated) with Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of Air New i.e., Air New and Clime Investment go up and down completely randomly.
Pair Corralation between Air New and Clime Investment
Assuming the 90 days trading horizon Air New Zealand is expected to under-perform the Clime Investment. But the stock apears to be less risky and, when comparing its historical volatility, Air New Zealand is 1.28 times less risky than Clime Investment. The stock trades about -0.11 of its potential returns per unit of risk. The Clime Investment Management is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Clime Investment Management on November 27, 2024 and sell it today you would earn a total of 5.00 from holding Clime Investment Management or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Clime Investment Management
Performance |
| Timeline |
| Air New Zealand |
| Clime Investment Man |
Air New and Clime Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Clime Investment
The main advantage of trading using opposite Air New and Clime Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New position performs unexpectedly, Clime Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Clime Investment will offset losses from the drop in Clime Investment's long position.| Air New vs. ARN Media Limited | Air New vs. Aurelia Metals | Air New vs. Truscott Mining Corp | Air New vs. COAST ENTERTAINMENT HOLDINGS |
| Clime Investment vs. ABACUS STORAGE KING | Clime Investment vs. Data3 | Clime Investment vs. Chalice Mining Limited | Clime Investment vs. Gateway Mining |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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